Exposing the telecom ripoff

BusinessWeek just published a terrific article, exposing the giant telecom corporations as fraudulently winning regulatory support that will solidify its control over the Internet. In part, justification is to promote the technology, but the article shows their research commitment is minimal.

51-2: “In case you haven’t been keeping score, after the original phone company, American Telephone & Telegraph, was broken up in 1984, the country was left with eight major regional telcos. Over the past decade these companies proceeded to gobble one another up. Now there are four: AT&T, Verizon, BellSouth, and Qwest …. The “new” AT&T is actually the rechristened SBC, based in Austin, Tex., which acquired the venerable name last year — and it’s in the process of buying BellSouth. That will leave two phone giants, Verizon and AT&T, and the much smaller Qwest. The biggest wireless carriers are Verizon Wireless, majority owned by Verizon, and Cingular, which is soon to be wholly owned by AT&T. It’s not exactly the return of the old Ma Bell monopoly — the world has gotten way too complicated for that — but that’s a lot of power in the hands of just two companies.”

52: “One way in which these companies are very different from the old phone monopoly is that while the original AT&T had a world-class research operation, its successors don’t. One of the signal facts of the communications revolution is that virtually all the new technologies that made it possible were developed outside the phone world. Last year, Verizon’s revenue came in at nearly $80 billion. AT&T (without BellSouth or Cingular) had revenue of $44 billion. And yet while Intel Corp. spent $5.1 billion last year on research and development, AT&T spent just $130 million. The word “research” doesn’t even appear in Verizon’s annual report.”

52: “The phone giants have even used “innovation” as a key justification for their aggressive merger wave. Last year, when SBC was buying the remnants of AT&T, SBC Chief Executive Edward E. Whitacre made sure to note that by merging, the combined company would have “the intellectual and financial resources to spur innovation”.”